LONDON (AP) — World stocks pushed their gains higher Monday as investors welcomed reports that U.S. commercial lender CIT Group Inc. is close to securing $3 billion worth of emergency funding to avoid bankruptcy. The dollar slid to a six-week low against the euro as optimism remained buoyant.
European shares followed Asia higher, with the FTSE 100 index of leading British shares closing up 54.87 points, or 1.3 percent, at 4,443.62 while Germany's DAX rose 51.75 points, or 1 percent, to 5,030.15. The CAC-40 in France was 52.48 points, or 1.6 percent, higher at 3,270.94.
On Wall Street, the Dow Jones industrial average was up 49.50 points, or 0.6 percent, at 8,793.44 around midday New York time while the broader Standard & Poor's 500 index rose 4.96 points, or 0.5 percent, to 945.34.
The main talking point in the markets Monday was the future of CIT, which last week came close to bankruptcy when the Obama administration balked at bailing it out. News media reports indicate CIT has agreed a deal with major bondholders to receive $3 billion in emergency funding. CIT shares soared around 80 percent Monday on hopes of a deal.
"News that the lender has secured financing and avoided Chapter 11 has swept away some of the risk aversion that looked set to stall progress in equity markets," said Anthony Grech, market strategist at IG Index. Chapter 11 is the legal term for restructuring under court protection.
The CIT news further fuels optimism from last week, when a run of stronger than anticipated U.S. second-quarter earnings — particularly from the country's biggest banks — helped stocks around the world enjoy big gains.
Attention will once again be on the U.S. earnings — among those to report include financial services and travel company American Express Co., aircraft maker Boeing Co. and heavy machinery firm Caterpillar Inc.
The reporting season also kicks into gear in Europe, with pharmaceuticals company GlaxoSmithkline PLC, mobile phone operator Vodafone PLC, Swiss bank Credit Suisse AG and French foods company Danone SA.
Investors will also be looking this week to Washington for direction when U.S. Federal Reserve Chairman Ben Bernanke makes his half-yearly testimony to Congress Tuesday and Wednesday. A key concern for investors is how the central blank plans to eventually undo extraordinary emergency measures taken as the financial crisis deepened. Those include cutting interest rates to near zero and buying up government securities.
Investors remained wary of assuming gains will continue, as the March to June advance was predicated on similar hopes that the worst of the recession had passed.
Neil Mackinnon, chief economist at ECU Group, noted that the S&P index seemed "a little tired" towards the end of last week and the index did not have the strength to take out the June high of 956.
"So this week's price action will be interesting," he said.
Earlier in Asia, Hong Kong's Hang Seng jumped 696.71 points, or 3.7 percent, to 19,502.37 and South Korea's Kospi added 38.41, or 2.7 percent, to 1,478.51. Most other major markets were also higher with Shanghai's benchmark rising 2.4 percent. Australian, Taiwan and Singapore shares were up 1 percent or more.
Indonesia's market was closed for a public holiday. It fell Friday after deadly bomb blasts at two luxury hotels in the capital Jakarta. Japanese financial markets were closed for a holiday.
Crude prices bounced in line with buoyant stock markets, with the benchmark contract rising $1.24 to $64.80 a barrel. The contract advanced $1.54 in Friday trade.
The dollar was 0.2 percent higher at 94.54 yen while the euro was up 0.7 percent at $1.4213, having earlier hit $1.4249, its highest level since early June.
In recent weeks the dollar and stocks have moved in opposite directions. As investors grow more willing to take on risk, stocks have rallied and the dollar has dropped against the euro. Conversely, when shares have fallen, the dollar has tended to rise as it is widely considered a safe haven asset despite all the problems afflicting the U.S. economy. The yen is considered even more of a safe haven than the dollar, hence the U.S. currency's gains against it Monday.
"Stock market exuberance over better than expected corporate earnings has erased interest in the safe-haven dollar," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.
____
AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.